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2017 Supreme(Pat) 1532

IN THE HIGH COURT OF JUDICATURE AT PATNA
SHIVAJI PANDEY, J.
Reliance Communications Limited - Appellant
Versus
The State of Bihar through the Secretary, Department of Industries & Ors. - Respondents
Civil Writ Jurisdiction Case No.14884, 15044 of 2016
Decided On : 11-04-2017

Advocates Appeared:
For the Petitioner: Mr. Rajendra Narain, Senior Adv, Mr. Rakesh Kumar Sinha, Adv, Mr. Anuj Prakash, Adv.
For the State : Mr. Kinkar Kumar, Mr. Yogendra pd. Sinha.
For the Private Respondent: Mr. Kishore Sharma, Adv, Mr. Ranjit Kumar, Adv.

Headnote:

The petitioner, a company incorporated under the Companies Act, 1956, challenged the order of the Micro, Small and Medium Facilitation Council (Facilitation Council) directing it to make payment of Rs.4,85,26,676/- with interest. The petitioner contended that the Facilitation Council acted completely de hors to the procedure provided under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). The Facilitation Council argued that the petitioner should have challenged the order before the appropriate forum and that the writ petitions were not maintainable.

Fact of the Case:

The petitioner, a company incorporated under the Companies Act, 1956, challenged the order of the Micro, Small and Medium Facilitation Council (Facilitation Council) directing it to make payment of Rs.4,85,26,676/- with interest. The petitioner contended that the Facilitation Council acted completely de hors to the procedure provided under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). The Facilitation Council argued that the petitioner should have challenged the order before the appropriate forum and that the writ petitions were not maintainable.

Finding of the Court:

The Court held that the Facilitation Council had failed to follow the procedure provided under Section 18 of the Act and that the petitioner was not required to exhaust alternative remedies before filing the writ petitions. The Court also held that the Facilitation Council was an independent body and that the petitioner's objection that the Facilitation Council was not an independent body was misplaced.

Issues: 1. Whether the Facilitation Council had followed the procedure provided under Section 18 of the Act? 2. Whether the petitioner was required to exhaust alternative remedies before filing the writ petitions? 3. Whether the Facilitation Council was an independent body?

Ratio Decidendi: 1. The Court held that the Facilitation Council had failed to follow the procedure provided under Section 18 of the Act. The Court noted that the Facilitation Council had not attempted to conciliate the dispute before directing the petitioner to make payment and that the Facilitation Council had not followed the proper procedure for arbitration. 2. The Court held that the petitioner was not required to exhaust alternative remedies before filing the writ petitions. The Court noted that the Facilitation Council had acted completely de hors to the procedure provided under the Act and that the petitioner would have been prejudiced if it had been required to exhaust alternative remedies. 3. The Court held that the Facilitation Council was an independent body. The Court noted that the Facilitation Council was not affiliated with either of the parties to the dispute and that the Facilitation Council had no interest in the outcome of the dispute.

Final Decision: The Court allowed the writ petitions and quashed the order of the Facilitation Council. The Court also directed the parties to appear before the Facilitation Council within 15 days from the date of the order and to cooperate with the Facilitation Council in its efforts to resolve the dispute.

JUDGMENT :

1. As the issue involved in these writ applications is identical, they are being disposed of by this common judgment. For convenience, the facts mentioned in C.W.J.C. No.14884 of 2016 are taken into consideration by this Court.

2. In these cases, the petitioner is challenging the order dated 30.06.2016 passed by the Micro, Small and Medium Facilitation Council, Patna (hereinafter referred to as “Facilitation Council”), thereby the petitioner has been directed to make payment of Rs.4,85,26,676/- with interest and for issuance of a writ in the nature of prohibition, restraining the Facilitation Council from passing any further orders in the said matter.

3. The petitioner is a Company incorporated under the Companies Act, 1956, providing telecommunication services in various States in India to its subscribers under U.A.S.L. licence issued by the Department of Telecommunications, Government of India. From time to time, it used to engage contractors by issuing Work Orders for creation of the infrastructure. The petitioner- Company has issued numerous Work Orders in favour of The Best Towers Private limited (hereinafter referred to as “the Tower Company”), respondent No.4 for carrying out the fabrication and construction work for tower and ancillary work of creation of infrastructure for mobile service. The petitioner-Company awarded the work each time by issuing the Work Order, stipulating method of payment and final payment would be made after completion of the Work Order. The Tower Company from time to time placed the demand bill and the petitioner-Company used to make payment.

4. The present dispute has been raised by the Tower Company that it had worked for the petitioner-Company from April, 2007 to 31.03.2008, raised the grievance that as per terms and conditions of the Work Orders, in spite of various representations from time to time, payments have not been made to the tune of Rs.4,85,26,676/- as on 31.03.2008, which has become due upon the petitioner-Company. The Tower Company in the event of non-payment approached the Facilitation Council, making complain that they have carried out the work in terms of the Work Order, but the payment has not been made. The Facilitation Council issued notice for appearance of the petitioner- Company. The meeting of the Facilitation Council was scheduled to be held on 15.09.2015, which was duly communicated to the petitioner-Company vide letter No.3504 dated 01.09.2015 but opted to remain absent, but the meeting was conducted on the due date. The proceeding of the meeting was communicated to the petitioner-Company vide letter No.4297 dated 03.11.2015 even then the petitioner-Company did not appear. Again vide registration letter No.4785 dated 21.12.2015 the petitioner was asked to furnish the detailed response within 15 days, otherwise, the case will be heard ex-parte. Whereupon, the petitioner company submitted his response on 30.12.2015, mentioned therein that the Tower Company has been paid Rs.81 crore during 2002 to 2012. It has also been said that the claim of the Tower Company that payment of some invoices remained unpaid, the petitioner-Company required supporting documents for unpaid invoices. It has further been stated that as per the policy of the Company the work is assigned to any contractor only through valid purchase order/agreement. The contractor has to complete work in accordance with terms and conditions mentioned in the purchase order and after completion of the work to the satisfaction of the concerned department of the Company, the process of payment of invoices is to be initiated. For payment of invoices, it must be accompanied with valid purchase order and successful completion certificate. In the said letter, it has been specifically mentioned that in the present matter the invoices of M/s. The Best Tower Company Limited lack, both essential and supporting document and in absence of such supporting document, the genuineness of invoice cannot be ascertained, the

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